Introduction of Islamic Banking
The thrust for Islamic Banking is founded on the desire to submit to the Divine Instructions
on all transactions, particularly those involving exchange of money for money. However, it
would be quite unfair to limit Islamic Banking to elimination of Riba only.
Riba is but one of the major undesirable elements of an economic transaction, the others
being Gharar (uncertainty) and Qimar (speculation). While elimination of these
objectionable aspects in a transaction is indeed a critical aim of Islamic banking system, it is
by no means its ultimate objective.
At the heart of Islamic Banking is a system of commercial transactions that not only provides
Halal modes of commercial transactions by avoiding that which is obnoxious and
objectionable, but also fosters ethical, fair and just practices.
A key element of Islamic economics is distribution of equitable rewards to the different
factors of production. Islamic economic system seeks system of Redistributive justice where
concentration of wealth in a few hands is countered and flow of money into economy is
fluent. Islamic Banking is, therefore, seen as a lynchpin to achieving the economic and social
goals of the Islamic economic system.
Islamic banking has been defined as banking in consonance with the ethos and value system
of Islam and governed, in addition to the conventional good governance and risk management
rules, by the Principles laid down by Islamic Shariah. Interest free banking is a narrow
concept denoting a number of banking instruments or operations, which avoid interest.
Islamic banking, the more general term is expected not only to avoid interest based
transactions, prohibited in the Islamic Shariah, but also to avoid unethical practices and
participate actively in achieving the goals and objectives of an Islamic economy.
Riba
It has been argued in vain for long in some circles that the prohibition in Islam is that of
excessive interest only. Or that it is the interest on consumptive loans that has been forbidden
and as such loans extended for commercial purposes are entitled to an excess over the
principal amount lent. Such tendentious arguing fails to give due understanding to verses 278
and 279 of Surah Al-Baqarah (quoted below).
“O ye who believe! Be afraid of Allah and give up what remains (due to you) from Riba
(usury) (from now onwards) if you are (really) believers! 2:278
And if you do not do it, take notice of war from Allah and His Messenger! But if you
repent, you shall have your capital sums 2:279
However, this does not mean that Islam prohibits any gain on principal sums. In Islam, profit
is the recognized reward for capital. When capital employed in permissible business yields
profit that “excess over capital” becomes the rightful and just claim of the owner of the
capital. As a corollary, the risk of loss also rests exclusively with the capital and no other
factor of production is expected to incur it.
Another important element of Islamic finance is that profit or reward can only be claimed in
the instance where either risk of loss has been assumed or effort has been expended. Profit is
therefore received by the provider of capital and wages/remuneration by labor/manager.
1
A depositor in an Islamic bank can therefore make earnings on his or her deposit in several
ways. Through return on his capital when that capital is employed in a business venture;
through sharing of profit when his capital is part of the capital that is employed in a
partnership, and finally through rental earnings on an asset that has been partially financed by
his capital.
Q1. What is Islamic Banking?
Ans. Islamic banking has been defined as banking in consonance with the ethos and value
system of Islam
and governed, in addition to the conventional good governance and risk management rules,
by the
principles laid down by Islamic Shariah. Interest free banking is a narrow concept denoting a
number of
banking instruments or operations, which avoid interest. Islamic banking, the more general
term is
expected not only to avoid interest-based transactions, prohibited in the Islamic Shariah, but
also to avoid
unethical practices and participate actively in achieving the goals and objectives of an Islamic
economy.
Q4. What is the Islamic Banking Global Scenario?
Ans. Over the last three decades Islamic banking and finance has developed into a full-
fledged system and
discipline reportedly growing at the rate of 15percent per annum. Today, Islamic financial
institutions, in
one form or the other, are working in about 75 countries of the world. Besides individual
financial
institutions operating in many countries, efforts have been underway to implement Islamic
banking on a
country wide and comprehensive basis in a number of countries. The instruments used by
them, both on
assets and liabilities sides, have developed significantly and therefore, they are also
participating in the
money and capital market transactions. In Malaysia, Bahrain and a few other countries of the
Gulf, Islamic
banks and financial institutions are working parallel with the conventional system.
2
Bahrain with the largest concentration of Islamic financial institutions in the Middle East
region, is hosting
26 Islamic financial institutions dealing in diversified activities including commercial
banking, investment
banking, offshore banking and funds management. It pursues a dual banking system, where
Islamic banks
operate in the environment in which Bahrain Monetary Agency (BMA) affords equal
opportunities and
treatment for Islamic banks as for conventional banks. Bahrain also hosts the newly created
Liquidity
Management Centre (LMC) and the International Islamic Financial Market (IIFM) to
coordinate the
operations of Islamic banks in the world. To provide appropriate regulatory set up, the BMA
has introduced
a comprehensive prudential and reporting framework that is industry-specific to the concept
of Islamic
banking and finance. Further, the BMA has pioneered a range of innovations designed to
broaden the depth
of Islamic financial markets and to provide Islamic institutions with wider opportunities to
manage their
liquidity.
Another country that has a visible existence of Islamic banking at comprehensive level is
Malaysia where
both conventional and Islamic banking systems are working in a competitive environment.
The share of
Islamic banking operations in Malaysia has grown from a nil in 1983 to above 8 percent of
total financial
system in 2003. They have a plan to enhance this share to 20 percent by the year 2010.
However, there
are some conceptual differences in interpretation and Shariah position of various contracts
like sale and
purchase of debt instruments and grant of gifts on savings and financial papers.
In Sudan, a system of Islamic banking and finance is in operation at national level. Like other
Islamic banks
3
around the world the banks in Sudan have been relying in the past on Murabaha financing.
However, the
share of Musharaka and Mudaraba operations is on increase and presently constitutes about
40 percent of
total bank financing. Although the Islamic financial system has taken a good start in Sudan,
significant
problems still remain to be addressed.
Like Sudan, Iran also switched over to Usury Free Banking at national level in March 1984.
However, there
are some conceptual differences between Islamic banking in Iran and the mainstream
movement of Islamic
banking and finance.
Owing to the growing amount of capital availability with Islamic banks, the refining of
Islamic financing
techniques and the huge requirement of infrastructure development in Muslim countries there
has been a
large number of project finance deals particularly in the Middle East region. Islamic banks
now participate in
a wide financing domain stretching from simple Shariah-compliant retail products to highly
complex
structured finance and large-scale project lending. These projects, inter alia, include power
stations, water
plants, roads, bridges and other infrastructure projects. Bahrain is the leading centre for
Islamic finance in
the Middle East region. The establishment of the Prudential Information and Regulatory
Framework for
Islamic Banks (PIRI) by the BMA in conjunction with AAOIFI has gone a long way towards
establishing a
legal and regulatory framework to meet the specific risks inherent in Islamic financing
structures.
The BMA has quite recently signed MoU with the London Metal Exchange (LME) to pool
assets to develop
and promote Shariah compliant tradable instruments for Islamic banking industry. The
arrangement is seen
4
as a major boost for industry’s integration in the global financial system and should set the
pace for
commodity-trading environment in Bahrain. BMA has also finalized draft guidelines for
issuance of Islamic
bonds and securities from Bahrain. In May 03, the Liquidity Management Centre (LMC)
launched its debut
US$ 250 million Sukuk on behalf of the Government of Bahrain.
National Commercial Bank (NCB) of Saudi Arabia has introduced an Advance Card that has
all the benefits
of a regular credit card. The card does not have a credit line and instead has a prepaid line. As
such, it does
not incur any interest. Added benefits are purchase protection, travel accident insurance, etc
and no
interest, no extra fees with no conditions, the card is fully Shariah compliant. It is more
secure than cash,
easy to load up and has worldwide acceptance. This prepaid card facility is especially
attractive to women,
youth, self employed and small establishment employees who sometimes do not meet the
strict
requirements of a regular credit card facility. Saudi Government has also endorsed an
Islamic-based law to
regulate the kingdom's lucrative Takaful sector and opened it for foreign investors.
Islamic banks have also built a strong presence in Malaysia, where Standard & Poor's
assigned a BBB+
rating to the $600 million Sharia-compliant trust certificates (called sukuk) issued by
Malaysia Global Sukuk
Inc. Bank Negara Malaysia (BNM) has announced to issue new Islamic Bank licences to
foreign players. The
Financial Sector Master plan maps out the liberalisation of Malaysia's banking and insurance
industry in
three phases during the next decade. It lists incentives to develop the Islamic financial sector
and enlarge
its market share to 20 percent, from under 10 percent now. A dedicated high court has been
set up to
5
handle Islamic banking and finance cases.
In United Kingdom, the Financial Services Authority is in final stages of issuing its first ever
Islamic banking
license to the proposed Islamic Bank of Britain, which has been sponsored by Gulf and UK
investors. The
United States of America has appointed Dr. Mahmoud El Gamal, an eminent
economist/expert on Islamic
banking to advise the US Treasury and Government departments on Islamic finance in June
2004.
Q8. Is it permissible for an Islamic bank to impose penalty for late payment?
Ans. In Islamic law it is permissible to penalize a debtor who is financially sound but delays
payment of
debt without any genuine reason. Such act of the debtor is unjust as the Prophet (PBUH) has
said, "A rich
debtor who delays payment of debt commits Zulm".
A heavy non-performing portfolio and default on part of the clients is a serious problem
confronting the
financial institutions all over the world including Pakistan. This problem could be a threat to
success of
Islamic banking system. If clients do not honor their commitment in respect of timely
payment of a debt
created in installment sale, Murabaha, leasing or do not pay banks’ share of profit in
participatory modes or
do not deliver goods at stipulated time in Salam and Istisna’a, it could cause irreparable loss
to the system,
the banks and financial institutions and ultimately to savers and the economy. The jurists
allow punishment
(T´azir) to such borrower in the form of fine. In the opinion of some Maliki jurists a delaying
borrower
would be obliged to pay for charitable activities. In view of the severity of the problem, all
Shariah bodies
like Islamic Fiqh Academy of the OIC, Shariat Appellate Bench of the Supreme Court of
Pakistan, etc. have
6
approved the provision of penalty clause in the contractual agreements that keeps a balance
between the
requirement in view of severity of the problem and that of the Shariah conditions/principles
to keep the fine
difference between interest and Murabaha profit intact. However, the penalty proceeds would
be used for
charity because penalty on default in repayment cannot become an automatic source of
income for the
creditor.
MANAGEMEMENT STRUCTURE
Bank Alfalah is proud of its human Resource, as almost all the employees have been picked
by the management. However, in this section, I would discuss those people who are
responsible for hiring such a bright staff and established such a magnificent bank. They are
the higher management of Bank Alfalah Limited.
Outgoing Chairman
 H.H. Sheikh Nahayan Mabarak Al- Nahayan
H.H. Sheikh Nahayan Mabarak is an important and prominent member of the ruling family of
Abu Dhabi. After the culmination of this study at Oxford, he returned to shoulder important
responsibilities in the state administration. In 1988, he was appointed president of the higher
colleges of Technology comprising of eight colleges throughout the UAE- a responsibility he
fulfilled with distinction. In 1990, he was appointed Minister of Higher Education Scientific
Research. Presently he also holds the presidency of the Society of the Natural History and
Heritage. In 1992, he becomes the Chairman of the Union National Bank and has since
remained involved in strategic management of the institution.
New Chairman
 H.E. Sheikh Hamdan Bin Mabarak Al- Nahayan
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BOARD OF DIRECTORS
H.E. Sheikh Hamdan Bin Mubarak
Al Nahayan
Chairman
Mr. Mohammad Saleem Akhtar Mr. Abdulla Nasser
Chief Executive Officer Hawalileel Al-Mansoori
Mr. Ikram Ul-Majeed
Mr. Abdulla Khalil Al Mutawa
Sehgal
Mr.Khalid Mana Saeed Al Otaiba Mr. Nadeem Iqbal Sheikh
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BOARD ADVISORY COMMITTREE
1. Mr. Abdulla Khalil Al Mutawa Director
2. Mr. Khalid Mana Saeed Al Qtaiba Director
3. Mr. Bashir A Tahir Member
4. Mr. Ganpat Singhvi Member
5. Mr. M.Iftikhar Shabbir Secretary
COMPANY SECRETARY
Mr. Hamid Ashraf
CHIEF FINANCIAL OFFICER
Mr. Zahid Ali h Jamall
AUDITORS
Taseer Hadi Khalid and company Chartered Accountants
HEAD OFFICE IN PAKISTAN
B A Building,
I.I Chundrigar Road,
P.O.Box 6773,
Karachi.
WEBSITE
www.bankalfalah.com
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ORGANIZATIONAL STRUCTURE
President (CEO)
Senior Executive Vice President
Executive Vice President
Senior Vice President
Vice President
Assistant Vice President
Officers Grade I, II, III
Clerical Staff Non-Clerical Staff
Cashier Typist Clerks & Guards
Messengers
Assistants
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OBJECTIVES
Bank Alfalah believes in the phrase “customer comes first”. Bank Alfalah’s objective
is to please their customers by fulfilling the financial needs as best as possible. They
believe in placing the client at the center of business and all of the products and
services.
Service excellence is one of the objectives of Bank Alfalah.
Alfalah strives continually on the development of new areas of activities to
distinguish itself in the market place along with traditional banking activities of
resource mobilization and credit disbursement.
Alfalah’s objective is the complete automation and computerization of all of its
banking activities.
Alfalah Training and Development program of its employees is aimed at developing
skills of its employees. It makes positive contribution to the service culture of the
banking system as a whole.
They are committed to put all their energies, resources and time to bring higher value
and satisfaction to their customers, employees and shareholders.
The introduction and development of innovative financial instrument will another
major objective of Bank Alfalah Limited.
Philosophies followed by Bank Alfalah
 High Quality Services
 Innovative Products And Services
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 Better Performance
Foreign Trade is another success of bank and has developed excellent Business and
correspondent relation with well renowned banks of the world.
Technology has opened new horizons in field of life. At the same time, rapid change in
customer preference has resulted in a major shift from manual to automated services.
Information technology today, is all pervading in the corporate world. Information
technology department of bank has successfully developed an advanced computer program
named BANK SMART. Bank Alfalah made heavy investment towards enhancing its
capabilities in the area of automation and information technology.
Bank has made remarkable achievements within a short period of time despite being in the
nascent stage. The bank is committed to put all its energy resources and time to bring higher
value and satisfaction of its customer, employees and shareholders successfully since 1997.
In order to know about Alfalah Islamic we have to get some knowledge about Alfalah Bank
history & also their present status.
HUMAN RESOURCE MANAGEMENT
Human Resource Planning
At Bank Alfalah Limited, Human Resource Planning involves a decision making in
three areas of combined activites:
Step-I The bank identifies its organizational needs and then acquires a right
king of human resource accordingly.
Step-II Bank motivates them to achieve excellent performance by giving them
different sorts of targets according to their job requirements.
12
Step-III It also creates an interactive link between the employee goals and the
organizational goals.
Job Description
It is descriptive in nature and constitutes a record of existing and additional job facts.
The order of job description is as follows:
 Job identification
 Job summary
 Duties performed
 Supervision given and received
Recruitment and Selection
Bank Alfalah Limited recruits three kinds of employees:
1. Top Level Management
2. Trainee Officers
3. Contractual Basis Employees
Training and Development
In Bank Alfalah Ltd. the process of Training and Development consists of various
other activities like:
a. Training:
i. The appraisal form of an employee indicates the areas in which the
employee should be trained and developed. It also elaborates the abilities
of an employee.
13
ii. Management and Organization Development Division of each region
timely reviews the employees and recommends them for training during
the operations it they note any discrepancy between the desired and actual
performance. This review is performed after every quarter.
iii. Upon the request of GM (Operation), indicates which sort of training is
needed in a particular region regarding the Operation Support and Service
b. Development:
i. Management Skill Training,
ii. Special Training for Foreign Transferred Employees,
Performance Appraisal:
It is a structured discussion between employee and supervisor. It provides an
opportunity for the supervisor to recognize an employee’s achievement, offer suggestions for
improvement when needed, discuss job responsibilities, define objectives, counsel for career
advancement, and justify a pay adjustment. Regarding the performance appraisal, bank
adopts both types of approaches.
14
a. Traditional Approach:
The traditional approach is primarily concerned with the overall organization
and its past performance. In Bank Alfalah, overall performance is reviews at
branch level. Each branch is liable to show its performance in a positive
direction according to set goals.
b. Development Approach:
This approach viewed the employees as individuals and has been forward
looking through the use of goal setting. All the employees in the each of the
branches are given a performa. Every employee working in the bank is
assigned targets, usually their target are in the form of amount. The
performances of all the branches are reviewed in the end of December. Till yet
Bank Alfalah, has no computerized system to assess the performance of
employees
Performance Appraisal Process:
The performance appraisal process in the Bank Alfalah Ltd. consists of four inter-
related steps:
i. Establish a common understanding between the manager (evaluator) and
employee (evaluate) regarding work expectations, mainly the work to be
accomplished and how those work are to be evaluated.
ii. Establish ongoing assessment of performance and the progress against work
expectation.
iii. Formal documentation of performance through the completion of a
performance and development appraisal form appropriate to the job family.
15
iv. The formal performance and development appraisal discussion, based on the
completed appraisal form and ending in the construction of a development
plan.
MANAGERIAL PRACTICES
Aggressive Banking
Bank alfalah expanding their network of Islamic Banking. Bank Al Baraka has been serving
the Islamic banking sector since 10 years and they have only 5 braches in Pakistan. On the
other hand bank Alfalah has established 20 branches in a year.
Motivation
Bank Alfalah motivating their employees by giving them comprehensive benefits and
professional environment within the organization, which enhances the performance of the
employees. Bank motivates their employees by giving 3 bonuses in a year.
BENEFITS
Monitory Benefits
Monitory benefits are given to the employees on the basis of their performance like salary
rise, cash prize.
Grade Promotion
Bank also provides benefit to their employees in the form of grade promotion. Grade
promotion motivates the employee to do their work efficiently and effectively.
Abroad Posting
Bank benefit their employees by sending them on overseas posting where they can enhance
their professional skills and get handsome financial benefits in terms of salary or fridge
benefits.
16
Controlling
Bank has proper setup of controlling the day to day transactions and operational affairs. Bank
controls the operations through a proper check and balance system and properly monitor the
daily work.
Internal Control Unit
Bank has an Internal Control Unit that monitors the daily transactions within the organization
and keeps informing the management about the rules and policies violation. Internal control
unit has a proper check and balance on operations and other bank departments.
Internal Audit
Internal audit is a tool to have a proper check on daily working in a bank. Internal auditor has
to point out the discrepancies found during audit. Internal auditors hand over the audit report
to the audit chief and he hand over that to the management. Management overlook all the
discrepancies and try to reduce the violation and also took the necessary actions. Internal
audit conducted in a bank twice a year.
External Audit
External auditors are the representatives of state bank of Pakistan. State bank assigned them
to audit the banks the find out the lapses or discrepancies according to the rules and
regulations of state bank of Pakistan. State bank imposed penalty on bank if they found any
discrepancies related to banking practices or procedures. External auditor hand over the audit
report to state bank of Pakistan and SBP handover the report to the management along with
the debit advice in form of penalty and management overlook the discrepancies and take
necessary actions. External audit conducted once in a year. Bank Al Falah has a Chartered
Accountant Company on his panel who prepare and overview the financial reports of the
bank Taseer Hadi & Co. is a chartered firm which is on the panel of Bank Alfalah.
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Reward Management
Reward Management elaborates how people are rewarded in accordance with their
value to an organization. It is concerned with both financial and non-financial rewards. A
reward system of an organization consist of integrated policies, processes and practices for
rewarding its employees in accordance with contribution, skill and competence and their
market worth.
In Bank Alfalah the elements of reward management system are consists of Basic
Pay; the fixed salary or wage which constitutes the rates for the job. This rate is varied in a
skill based or competence based system according to the individual’s skill or competence.
The rates are fixed by managerial judgement of what is required to recruit and retain the
employee.
In Bank Alfalah there is no any concept of individual performance related pay except
to the Business Development Officer. Business Development Officers are those who are
hired at contractual basis. They are assigned different targets. If they exceed to the targets
they can enjoy the individual performance related pay otherwise they are fied.
There is no concept of bonuses, commission or over time related pay. The official
timing of bank is 09.00 AM to 06.00 PM but almost all of the employees have to work till
near 08.00 PM. However, for this additional work they are not getting any additional bonuses
/ over time.
Islamic financing: Asset-based financing
A key feature of Islamic banking is that unlike conventional banks which deal
primarily in money and financial securities, Islamic financing is related to an asset that is a
feature of the transaction, and quite often the principal feature itself. From this springs an
important distinguishing feature of Islam wherein Islamic financing is always based on
illiquid assets that have intrinsic value. Profit to Islamic financing is generated through
bonafide sale of these assets.
Conventional banking, on the other hand, is free of such limitations. It lends money and
makes its earnings through this act of lending. Its earnings are unconcerned with the
economic fate of its lending.
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Philosophy of Islamic Banking & finance
Islamic Shariah prohibits ‘interest’ but it does not prohibit all gains on capital. It is
only the increase stipulated or sought over the principal of a loan or debt that is prohibited.
Islamic principles simply require that performance of capital should also be considered while
rewarding the capital. The prohibition of a risk free return and permission of trading, as
enshrined in the Verse 2:275 of the Holy Quran, makes the financial activities in an Islamic
set-up real asset-backed with ability to cause ‘value addition’. Islamic banking system is
based on risk-sharing, owning and handling of physical goods, involvement in the process of
trading, leasing and construction contracts using various Islamic modes of finance. As such,
Islamic banks deal with asset management for the purpose of income generation. They will
have to prudently handle the unique risks involved in management of assets by adherence to
best practices of corporate governance. Once the banks have stable stream of Halal income,
depositors will also receive stable and Halal income.
The forms of businesses allowed by Islam at the time the Holy Quran was revealed included
joint ventures based on sharing of risks & profits and provision of services through trading,
both cash and credit, and leasing activities. In the Verse II:275, Allah the Almighty did not
deny the apparent similarity between trade profit in credit sale and Riba in loaning, but
resolutely informed that Allah has permitted trade and prohibited Riba.
Profit has been recognized as ‘reward’ for (use of) capital and Islam permits gainful
deployment of surplus resources for enhancement of their value. However, alongwith the
entitlement of profit, the liability of risk of loss on capital rests with the capital itself; no other
factor can be made to bear the burden of the risk of loss. Financial transactions, in order to be
permissible, should be associated with goods, services or benefits. At macro level, this
feature of Islamic finance can be helpful in creating better discipline in conduct of fiscal and
monetary policies.
Besides trading, Islam allows leasing of assets and getting rentals against the usufruct taken
by the lessee.
All such things/assets corpus of which is not consumed with their use can be leased out
against fixed rentals. The ownership in leased assets remains with the lesser that assumes
risks and gets rewards of his ownership.
Difference between Conventional & Islamic Banking
The RIBA is an Arabic word, which means to increase, to enlarge. Thus, riba is the
fixed increase that a lender receives from the borrower in place of the time given to the
borrower for the repayment of the principal. The factor that the loan is given to a poor person
or a rich one, given for funeral and burial purpose or welfare scheme or for trade and
commercial business does not make any difference in receiving the increased amount over
the principal. This is what is meant by riba from a moral and spiritual point of view, charity is
based on generosity, sympathy and large-heartedness while interest emerges from selfishness
and money worship. From a social point of view, if the rich take the poor as the means for
exploitation, the society will gradually disintegrate. On the other hand, if the dealings are
done on the basis of mutual sympathy, society shall be integrated. Charity makes the 'haves'
19
and meanwhile treat the 'have nots' with sympathy, mutual love and fellowship.
Interest is a hindrance to, and charity is a catalyst for the social, economic, moral and
spiritual progress. The Islamic financial system employs the concept of participation in the
enterprise, utilizing the funds at risk on a profit and loss sharing basis. This by no means
implies that investments with financial institutions are necessarily speculative. This can be
excluded by careful investment policy, diversification of risk and prudent management by
Islamic financial institutions. The concept of profit-and-loss sharing, as a basis of financial
transactions is a progressive one as it distinguishes good performance from the bad and the
mediocre. This concept therefore encourages better resource management.
. Effect of Islamic Banking on Various
Disciplines
Fiqh: A change is already taking place. Instead of thinking within the narrow
domains of Hanafi, Maliki, Shafie, Hanbali and Ja’fari fiqhi schools,
contemporary fuqaha are joining hands and looking for common ground that
best suits contemporary needs. OIC Fiqh Academy and AAOIFI provide formal international
platforms. Individual Islamic banks have either international representation on their Shari’ah
Boards or they are open to international influences. Accounting, Financial Management,
Marketing and Bank Management: When full significance of the Shari’ah is recognized,
these areas will change. The impetus will come from, among other factors, Islamic concept of
“rights” (based on Islamic view of ownership) and permissible forms of transactions.
Economics: New economics will emerge for the new economic setup. Changes will be more
noticeable in the areas of macro and monetary economics. Public Policy: A paradigm shift
20
will take place due to changes in what governments may do and the ways in which they
would work.
Modes of Islamic Banking/Finance
Musharakah
Musharakah means a relationship established under a contract by the mutual consent of the
parties for sharing of profits and losses in the joint business. It is an agreement under which
the Islamic bank provides funds, which are mixed with the funds of the business enterprise
and others. All providers of capital are entitled to participate in management, but not
necessarily required to do so. The profit is distributed among the partners in pre-agreed ratios,
while the loss is borne by each partner strictly in proportion to respective capital
contributions.
Mudarabah
A form of partnership where one party provides the funds while the other provides expertise
and management. The latter is referred to as the Mudarib. Any profits accrued are shared
between the two parties on a pre-agreed basis, while loss is borne only by the provider of the
capital.
Murabaha
Literally it means a sale on mutually agreed profit. Technically, it is a contract of sale in
which the seller declares his cost and profit. Islamic banks have adopted this as a mode of
financing. As a financing technique, it involves a request by the client to the bank to purchase
certain goods for him. The bank does that for a definite profit over the cost, which is
stipulated in advance.
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Ijarah
Ijarah is a contract of a known and proposed usufruct against a specified and lawful return or
consideration for the service or return for the benefit proposed to be taken, or for the effort or
work proposed to be expended. In other words, Ijarah or leasing is the transfer of usufruct for
a consideration which is rent in case of hiring of assets or things and wage in case of hiring of
persons.
Ijarah-Wal-Iqtina
A contract under which an Islamic bank provides equipment, building or other assets to the
client against an agreed rental together with a unilateral undertaking by the bank or the client
that at the end of the lease period, the ownership in the asset would be transferred to the
lessee. The undertaking or the promise does not become an integral part of the lease contract
to make it conditional. The rentals as well as the purchase price are fixed in such manner that
the bank gets back its principal sum along with profit over the period of lease.
Musawamah
Musawamah is a general and regular kind of sale in which price of the commodity to be
traded is bargained between seller and the buyer without any reference to the price paid or
cost incurred by the former. Thus, it is different from Murabaha in respect of pricing formula.
Unlike Murabaha, seller in Musawamah is not obliged to reveal his cost. Both the parties
negotiate on the price. All other conditions relevant to Murabaha are valid for Musawamah as
well. Musawamah can be used where the seller is not in a position to ascertain precisely the
costs of commodities that he is offering to sell.
Istisna'a
It is a contractual agreement for manufacturing goods and commodities, allowing cash
payment in advance and future delivery or a future payment and future delivery. Istisna'a can
be used for providing the facility of financing the manufacture or construction of houses,
plants, projects and building of bridges, roads and highways.
Bai Muajjal
Literally it means a credit sale. Technically, it is a financing technique adopted by Islamic
banks that takes the form of Murabaha Muajjal. It is a contract in which the bank earns a
profit margin on his purchase price and allows the buyer to pay the price of the commodity at
a future date in a lump sum or in installments. It has to expressly mention cost of the
commodity and the margin of profit is mutually agreed. The price fixed for the commodity in
such a transaction can be the same as the spot price or higher or lower than the spot price.
22
Bai Salam
Salam means a contract in which advance payment is made for goods to be delivered later on.
The seller undertakes to supply some specific goods to the buyer at a future date in exchange
of an advance price fully paid at the time of contract. It is necessary that the quality of the
commodity intended to be purchased is fully specified leaving no ambiguity leading to
dispute. The objects of this sale are goods and cannot be gold, silver or currencies. Barring
this, Bai Salam covers almost everything, which is capable of being definitely described as to
quantity, quality and workmanship.
Information about Bank Alfalah (Islamic)
Great journeys begin with but a single step and mighty oaks are born out of humble
seedlings. Bank Alfalah – Islamic Banking Division (BAL-IBD) – presently a division of
Bank Alfalah Limited – is gearing up to become a separate, full-fledged Islamic Banking
entity. BAL-IBD offers to its customers a broad range of Islamic products under personal,
consumer and corporate banking modes. The array of Islamic instruments at the disposal of
BAL-IBD is equipped to provide efficient and satisfying solutions to our customers’ needs.
Our Islamic products are Shariah-compliant carrying the seal of approval of the Centre of
Islamic Economics, an institution vested with powers to attest authenticity and legitimacy of
Islamic banking products in Pakistan.
BAL-IBD has entered into a Shariah Consultancy agreement with the Centre of Islamic
Economics, Karachi, which is a noted and well-known seat of learning for Shariah scholars
and a prominent institution dealing in Shariah Advisory services. Besides assisting in
advancement of the Division’s product portfolio, the Centre also stamps approval of the
Division’s conduct of business following periodic audits. These audits are in addition to those
carried out by the State Bank of Pakistan and the internal audits undertaken by the Division
itself.
Performance
Bank Alfalah’s Islamic Banking Division (BAL-IBD) started operations in 2003 and at its
yearend reflected a modest capital base of Rs 100 million and deposits totalling Rs 113.7m.
By following yearend, BAL-IBD’s equity had risen more than 4 times to Rs 569m and the
balance sheet footing had swelled to Rs 7,799 million. Deposit size had grown from less than
Rs 114m to over Rs 7,229 million.
The pace of frenetic, triple digit growth was continued over the next twelve months as equity
more than doubled to Rs 1,278 million from Rs 569m. Assets also recorded a more than
100% growth, climbing to Rs 15,634 million from Rs 7,799 million. Deposits alone failed to
double – rising to Rs 12,476m from Rs 6,548 million – yet managing a healthy 90% increase.
Financial results as of June 30, 2006, reflect growth but at more modest pace. Total balance
sheet size fell shy of Rs 18 billion – Rs 17,970m vs Rs 15,634m – and deposits climbed to Rs
14,111 million, rising Rs 1,635 million in six month’s period. Income for the 6-month period
23
was Rs 111.23 million.
Branch Network
Faisalabad
No. Branch Name Address PABX FAX No
1 Kutchery Bazar, P-36, Kutchery Bazar, 041-2603021-25
Faisalabad Faisalabad
2 IBD-Medical College 1-Ramna, Opp. Punjab 041-8581602-04 041-8581582
Road Medical College, Jail
road, Faisalabad
Gujranwala
No. Branch Name Address PABX FAX No
1 IBD- G.T. Road, Faisal Arcade, G.T. 055-4557301-9 055-4557310
Gujranwala Road, Gujranwala
Islamabad
No. Branch Name Address PABX FAX No
1 Jinnah Avenue, Islamabad REDCO Plaza, Jinnah 051-2879580-4 051-2879589
Avenue, Blue Area,
Islamabad
2 IBD - G-10 Markaz 20-A, Sardar Plaza, G- 051-2819101-5 051-2819100
10 Markaz, Islamabad
Karachi
No. Branch Name Address PABX FAX No
1 Uni Tower, Karachi I. I. Chundrigar Road, 021-2472295-98
24
Karachi
2 IBD-Shahrah-e-Faisal Ground Floor, Fortume 021-4315271-4 021-4313581
Centre, Shahrah-e-
Faisal, Karachi
3 IBD- Korangi Industrial "Shop No. 1, Plot # (021) 5067031 (021) 5067031
Area 27/28, Sector-16,
Korangi Industrial
Area, Karachi
4 IBD- Gulshan-e-Iqbal Plot # 40-B, Block#13- (021) 4144650- (021) 4144653
A, KDA Scheme No. 52
24, Gulshan-e-Iqbal,
Karachi
5 IBD- Jodia Bazar Plot No. 112, Durya (021) 2446542-5 (021) 2430492
Lal Street, Jodia Bazar,
Karachi
6 IBD- Gulistan-e-Jauhar "Eastern Pride,
Gulistan-e-Jauhar
No.15, No.15
7 IBD - DHA Branch 23-C, Main Khayabn-e- 051-5313873-80 021-5313872
Ittehad, Phase II
Extension, DHA,
Karachi
8 IBD - Dhorajee Branch Plot No. 35/127, Block 021-7685531
7 & 8, C.P. Berar
Cooprative Housing
Society, Karachi
9 IBD - North Nazimabad D-3, Block A, North 021-6633133, 021-6633135
Branch Nazimabad, Karachi 021-6633177
Lahore
No. Branch Name Address PABX FAX No
1 Defence, Lahore 93-Y, Commercial 042-5746190 042-5746191-5
Area, Defence Phase III
2 Gulberg, Lahore 66, Main Boulevard, 042-5781841-55 042-5781856
Gulberg, Lahore
3 McLeod Road Lahore Abid Plaza, 13, 042-7211631-5 042-721 1640
McLeod Road, Lahore
4 IBD-Jauhar Town 69--R-1, M. A. Johar 042-5313401-05 042-5313406
Town, Lahore
25
5 IBD- Qurtaba Chowk Rehman Chambers, (042) 7114612- (042) 7114618
Qurtaba Chowk, 16
Mozang Chungi,
Lahore
6 IBD- Zarrar Shaheed Road 1500-F, Dubai Chowk, (042) 6613853- (042) 6673224
Zarrar Shaheed Road, 62
Lahore Cantt., Lahore
7 IBD- Gulshan-e-Ravi "Block F, Main Road, (042) 7404811- (042) 7404821
Gulshan-e-Ravi, 20
Lahore
8 IBD- Mughalpura Branch Opposite Lalpul, 042-6524701-9 042-6524710
Jehangir Rd,
Mughalpura, Lahore
9 IBD - Wahdat Road 14-Main Wahdat Road,
Branch Lahore
10 IBD - Multan Road Opposite Benz Factory, 042-7490041-45 042-7490046
Main Multan Road,
Lahore
Multan
No. Branch Name Address PABX FAX No
1 IBD-Bosan Road 2, Bosan Road, Multan 061-750941-5 061-750885
Peshawar
No. Branch Name Address PABX FAX No
1 IBD-Jamrud Road Azam Towers, Arbab 091-5701385-89 091-5701392
Chawk, Jamrud Road,
Peshawar
Rahim Yar Khan
No. Branch Name Address PABX FAX No
1 IBD- Rahim Yar Khan "11-12-13, City Centre, (068) 5885331-2 (068) 5885668
Shahi Road
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Rawalpindi
No. Branch Name Address PABX FAX No
1 IBD-Cantt 125-D, Muree Road, 051--5795184- 051-5795189
Rawalpindi 88
2 IBD - Satellite Town 400-B, Block B, 051-4452048-9 051-4452050
Branch Commercial Market,
Satellite Town,
Rawalpindi
Sialkot
No. Branch Name Address PABX FAX No
1 IBD-Khadim Ali Road, Ali Building, Khadim 052-3241302-05 052-3241306
Sialkot Ali Road, Sialkot
Principal Islamic Instruments of Bank Alfalah (Islamic)
Musharakah:
Musharakah is one of the two ideal modes of Islamic financing. The other one being
Mudarabah. Musharakah is a contractual relationship formed through mutual consent of the
parties for sharing of profits and losses in a joint venture. Assets in the venture are jointly
owned in proportion to each partner’s contribution. The profits are shared in a pre-agreed
ratio. Losses, however, are incurred in proportion to each partner’s investment. Islamic Bank
representing share of its depositors invests funds in the joint venture alongside other
investor(s).
Mudarabah:
Like Musharakah, Mudarabah is also a form of partnership. Whereas all partners in
Musharakah contribute capital, under Mudarabah partnership is formed between provider of
capital and provider of expertise or human resource. Proportions for sharing profit are
decided upfront. Losses are incurred solely by the partner contributing capital.
Murabaha:
Murabaha is a non-participatory mode of Islamic financing where the bank sells the asset
required by its client to the client on cost-plus basis. The asset is first purchased by the bank
and the bank incurs the risk of any loss or damage to the asset as long as the asset remains
under its ownership. Upon sale of the asset, the Islamic bank is obligated to inform the client
of the exact cost incurred in the purchase of the asset and the margin of profit incorporated in
the sale price. Payment by the client of the sale price may be deferred in which case it would
become Muajjal. The selling price once agreed cannot be changed even when the client fails
to pay on the agreed date.
27
Ijara:
Under this facility a client may take on rent, property, vehicle or any other real asset
belonging to the bank. The bank transfers the right of use of the asset to the client, while
retaining the ownership of the asset. The client pays periodic rent to the bank for the use of
the asset. Basis for rentals can be fixed as well as floating. Any change is rental may be made
through mutual consent.
Salam:
Salam is a contract of advanced payment against deferred delivery of goods. Goods paid for
in advance by the buyer are delivered by the seller after an interval of time. The Seller
receives in advance fully paid price of the goods at the time of contract undertaking to deliver
the goods specified by the buyer at a future date.
Istisna:
Manufacture of a specific product against precise specifications by a manufacturer for
delivery to buyer. It is necessary that the price of the product and product specifications are
fully agreed upon by the manufacturer and the buyer, and that the material required for
manufacture is arranged by the manufacturer.
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Products & Services
Personal Banking
1. Personal Accounts
Bank Alfalah – Islamic Banking Division (BAL-IBD) offers Current, Savings and Term
Deposit facilities to its customers seeking personal banking relationships with the following
features:
Facility Minimum balance Profit Zakat deductions
Current deposit PKR 10,000/= Nil Not applicable
Musharakah PKR 5,000/= Tiered structure, 6 Applicable
Savings deposit monthly pay-out
Musharakah PKR 50,000/= Tiered structure, 6 Applicable
Term deposit monthly pay-out
‡ All profits subject to 10% withholding tax
On-line cash deposit facility at all branches of Bank Alfalah
On-line transfer facility between all branches of BAL-IBD
2. Remittances
Foreign and local remittances are both available. Foreign remittances are available in the
following currencies: US dollars, Pound Sterling and Euro.
3. Locker services
Locker services are offered at select branches. Lockers are available in three sizes – small,
medium and large. Annual charges for the lockers are as follows:
Small Rs. 1,000/-
Medium Rs. 2,000/-
Large Rs 3,000/-
Lockers are available to account holders and carry an insurance value of Rs.250,000/-
29
Consumer Banking
1. Alfalah Musharaka Homes
With Alfalah Musharaka homes, you can participate with
Bank Alfalah-Islamic Banking Division (BAL-IBD) in
joint ownership of property where BAL-IBD invests a
certain amount, usually up to 80% of the property value.
Through monthly payments – a composite of rent for use
of property and purchase of BAL-IBDs’ Musharaka
shares/units in the property – to BAL-IBD you will be able
to increase your stake in the property every month. The
rental component will be readjusted every month to reflect
your growing share of ownership in the property. Following purchase of all Musharaka units
initially owned by BAL-IBD you shall become the sole owner of the house with a free Title to
the property.
The Alfalah Musharaka Homes product can be used in multiple situations, giving you pure
Islamic solutions for your desired objectives.
 Purchase an already constructed house (Alfalah Buyer)
 Purchase a plot and subsequently construct upon it (Alfalah Builder)
 Renovate, extend, restore and enhance your already owned housing unit (Alfalah
Renovation)
 Transfer your existing exposure of housing finance facility from another financial
institution to our Riba-free facility
You have the option to choose tenures for the purchase of units from between 3 to 20 years*
* 3 to 7 years in case of renovation.
2. Alfalah Car Ijarah
A Shariah compliant car-leasing scheme with added features
such as:
 No upfront registration charges
 No upfront insurance premium
 No rentals before delivery of car
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The facility applies to all locally-assembled new cars up to Rs 4 million. Used cars not older
than three years can also be considered.
3. Alfalah Hilal/Debit Card
Carry your bank account in your wallet with Alfalah
HilalCard
Bank Alfalah Islamic Banking Division (IBD) offers Alfalah HilalCard to its customers for a
conscious free spending in a modernized form of currency that provides you with a wide
range of accessibility using VISA’s worldwide network.
The Alfalah HilalCard is an International VISA Debit card which gives you an unlimited
access to your current/savings (musharka) account with a simple swipe, at more than 1
million ATMs and 27 million outlets around the world.
Alfalah Hilal Card can be utilized for all your financial needs around the world, round the
clock, wherever VISA cards are accepted locally and Internationally, giving you a more
secure and convenient mode of payment.
Alfalah HilalCard is the revolutionary, new-age form of cash that provides you greater
freedom, security and convenience, combined with the wide reach of Visa Network.
This single card brings just about everything within your reach. Now, you can use your
Alfalah HilalCard for all your financial needs around the world, round the clock, wherever
Visa cards are accepted, locally and internationally.
The reasons that make Alfalah Hilal Card different from others:
 HILAL CARD IS A BUY NOW, PAY NOW OPTION.
 4 No monthly repayment
 4 No interest charges
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 4 Backed by a customer maintained current/savings (musharaka) account
 4 Your limit is your balance
 No Minimum Income Requirement - all you need to do is open an account in any
branch of Bank Alfalah Limited
 No PIN required for Retail Transactions
 Accepted at more than 1 Million ATMs and 27 Million retail outlets around the
world.
Hilal Card can be used electronically at any retail outlet or ATM that accepts any VISA
cards.
Difference between a Hilal Card and a Credit Card
Put in simple terms, a Hilal Card is a Buy Now, Pay Now option while a Credit Card is a Buy
Now, Pay Later option.
•No monthly repayment.
• No interest charged.
• Backed by a customer maintained current / savings (Musharaka) account.
• Your limit is your balance.
Introduction
Get familiar with your Alfalah HilalCard
FRONT
1. Your Name
2. Your exclusive 16 digit card number
3. Validity Period
4. VISA Logo.
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BACK
1. A magnetic stripe containing coded information for the security of your card.
2. Your Signature panel
3. VISA Plus Logo
4. Bank Alfalah contact.
5. 3D Dove Hologram for the security of your card.
PIN And Card activation
Personal Identification Number (PIN)
You will receive your PIN within 7-10 working days after receiving the Card for using your card on
VISA/Electron/ PLUS branded ATMs worldwide. Please beware that your PIN is very confidential. In case
of being lost/stolen or known to someone else, report the matter immediately to our Call Centre 111-
225-111 to request for a new PIN.
Card Activation
For your safety, your Alfalah HilalCard is sent to you inactive. Your Alfalah HilalCard is ready to use from
the moment you get it activated. Upon receipt of your card, you must sign across the signature panel at
the back of your card.
a) To activate your card simply call the Bank Alfalah Call Centre 111-225-111.
or
b) Activate your card by entering your PIN for a cash withdrawal transaction at any ATM where VISA is
accepted, locally and internationally. The personal Identification number (PIN) will be issued to you
separately for using your Alfalah HilalCard at ATMs. Please ensure that you have received your PIN
before trying to withdraw cash.
In case of any difficulty, please call the Bank Alfalah Call Centre at 111-225-111. We will be glad to
assist you.
The power of Alfalah HilalCard
The Alfalah HilalCard can be used electronically at any retail outlet or ATM that accepts any VISA cards
and displays these logos:
Personal Identification Number (PIN):
Debit cards that are currently in Pakistan require the cardmember to enter the PIN number in order to
complete a transaction. The Alfalah HilalCard is a one swipe card and does not require you to remember
any PIN in order to execute retail transactions. The PINs which will be delivered to you for Alfalah
HilalCard will only be required for ATM based transactions.
Special POS machines:
In order to use other debit cards currently in the market you have to find outlets that carry special POS
machines on which these cards can be used. Alfalah HilalCard is accepted at all those outlets displaying
the VISA logo and having self-printing POS terminals.
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Global Acceptability
The Alfalah HilalCard is globally accepted; welcomed at all locations displaying the VISA/
ELECTRON/PLUS logos with self-printing POS terminals. Your card is accepted at nearly 27 million
physical locations in more than 130 countries around the globe, with above 22,000 major establishments
in Pakistan.
With your Alfalah HilalCard, you can pay for shopping, meals, travel, entertainment, holiday, petrol and
much more. Also it gives you access to ready cash through your Alfalah HilalCard and PIN (Personal
Identification Number) at more than 1 million ATMs to withdraw any amount up to your available bank
account balance. This premier card service is a convenient point-of-sale alternative for ATM cardholders
who do not qualify for VISA credit purchasing power. By getting Alfalah HilalCard, you can access your
bank account at Bank Alfalah from anywhere in the world.
24-Hour Customer Service
Our 24-Hour Customer Service is there to help you with your requests. Our well-trained and qualified
Customer Service team can be contacted at UAN: 111-225-111. They will be able to assist you in:
a. Activating your Card
b. Answering your queries
c. Registering your complaints
d. Reporting a lost / stolen card
Foreign Transactions
Transactions made outside Pakistan will be converted from the transaction currency to US Dollars, based
on international exchange rate prevailing on that date (Currency Conversion rate is a rate selected by
VISA from the range of rates available in wholesale currency markets for the applicable processing date,
which may vary from the rate VISA itself receives, or the government-mandated rate in effect for the
applicable processing date in each instance, plus or minus any adjustment determined by the issuer). In
order to assist card members, all transactions will be converted to Pak Rupees for payment. This
conversation will be based on the market exchange rate quoted by authorized money changers and in
accordance with the Bank’s Procedures applicable from time to time.
Zero Loss Liability
If ever you lose your card, Bank Alfalah ensures that you never have to worry about it. You are covered
for all fraudulent charges made on your card as soon as it has been reported lost to us. Just make sure
that you report the loss immediately upon discovery. You are completely secure against loss/ theft after
the card loss has been reported to us.
No Minimum Income Requirement
Unlike other Cards, the Alfalah HilalCard is easy to obtain. There is no preset income requirement to
enjoy the benefits of this fast, convenient and safe payment card. All you need to do is open and
maintain an account with any of the branches of Bank Alfalah Limited.
Simplicity
Charge goods and services to your Alfalah HilalCard at all point-of-sale terminals with self-printing ability
displaying VISA sign both in Pakistan and abroad.
Flexibility
With Alfalah HilalCard you may withdraw cash from over 1 million Automatic teller machines worldwide.
You no longer need to worry whether you'll make it to the bank before closing time, because ATMs never
close - they are open 24 hours a day, 7 days a week, 365 days a year.
Promptness
Using Alfalah HilalCard at ATM and / or shops requires less time than queuing in the Bank and writing
out checks.
Controlled Spending
All Alfalah HilalCard transactions are subject to authorization, which means whenever you do a
34
transaction the status of your account is checked. Therefore you eliminate the risk of spending the
money you don't have - you yourself control your account.
Overview of Expenses
Each single charge and each withdrawal of cash at ATM that is made using your Alfalah HilalCard shall be
clearly itemized on your bank statement enabling you to easily check the status of your account.
Immediate Payment
With Alfalah HilalCard you pay your bills immediately unlike when you use a Credit Card and get the bill
later. The amount is directly debited from your designated Current / Savings (Musharaka) account.
How to Use Your Alfalah HilalCard
Shopping - Local and International Usage
Alfalah HilalCard is accepted at over 27 million physical locations in more than 130 countries around the
globe, with more than 22,000 establishments in Pakistan
 Your Alfalah HilalCard is welcomed at all merchant outlets with self-printing terminals that
display the VISA sign in Pakistan and around the world.
 To make a payment, present your Alfalah HilalCard at the time of making the payment and
inform the cashier of your mode of payment.
 The merchant establishment will ‘Swipe’ your Alfalah HilalCard on the self-printing terminal.
Please ensure that the Merchant does not use a manual Imprinter or POS machine without self
printing option.
 The POS terminal will generate a ‘charge slip’. The merchant establishment will request you to
sign the charge slip.
 When your purchase transaction is complete, the transaction amount will immediately be
debited to your Bank Alfalah designated account.
Purchase Limit
Your purchase limit is equivalent to the available balance in your account. Please note that if you have
multiple accounts with Bank Alfalah Limited, only the default account that you have designated in the
application form will be used. Moreover, your daily transaction limit is up to Rs. 50,000/-on cash & Rs.
50,000/- on retail transactions.
Do’s
 Keep an eye on your Card at any merchant outlet; always ensure that your Card is within sight.
The merchant’s personnel should swipe your Card once on the self printing POS terminal and
not on any other devices. Should you feel anything suspicious, speak to the manager at once.
35
 While using your Alfalah HilalCard at any merchant establishment, ensure all details have been
entered correctly
and completely before signing the charge slip.
 Always use the same signature as that on your Alfalah HilalCard.
 Retain your copy of the charge slip for future reference.
 After using your Card at the merchant establishment, please ensure that the card returned to
you belongs to you.
Don’ts
 DO NOT use your Card at merchants with paper imprinters / POS terminals without self printing
option or for Mail, Telephone and Internet transactions.
 DO NOT use your Card at hotels during check in for “blocking the amount” as done for Credit
Cards.
 DO NOT use the Card where advance payment is required even before completion of the
purchase transactions / services as it will not be refunded.
Cash Withdrawal at ATMs and Cash Counters
 Alfalah HilalCard can be used on more than 1 million ATMs around the world to withdraw any
amount up to your available designated bank account balance.*
 • Insert your Alfalah HilalCard in the ATM slot.

 • Enter your ATM PIN

 • For ATMs that provide you the Account Select facility requesting you to specify the kind of
account you want to access, please proceed as follows:
 1. For accessing your Savings (Musharaka) account choose “Savings”.
2. For accessing your Current account, choose “Checking” or “Current” (one of these two would
usually be available).
3. Please be careful while performing the Account Select as a wrong selection may lead to your
transaction getting declined.
 • Follow the standard steps (as guided on the screen) and complete your withdrawal.
 You also have the option of withdrawing the cash by requesting an Over-the-Counter cash
advance at all VISA member financial institutions worldwide, or at any of the Bank Alfalah
branches, or other VISA member banks in Pakistan.
 Cash Withdrawal Limit
 The daily cash withdrawal Limit is up to Rs. 50,000/-. Please note that different ATMs have
varying
maximum limits for cash disbursement per transaction. Please check the ATM screen for the
same.

36
Schedule of Charges
The following Schedule of Charges is associated with your Alfalah HilalCard. Please make a
note of the following so that you are fully informed of the charges on your Card.
Joining Fee: N/A
Annual Fee: N/A
Late Fee: N/A
Card Replacement Fee: Rs. 500/-
ROC* Retrieval Fee: Rs. 350/- for local ROC &
Rs. 800/- for Int’l ROC
Cash Withdrawal
From Bank Alfalah’s ATM: NIL
From 1 Link member bank Rs. 15/- per transaction
ATM:
From MNET ATM: Rs. 15/- per transaction
From VISA member bank Rs. 300/- or 3% of cash
ATM: withdrawal amount
From Bank Alfalah’s POS NIL
Machine:
From Non-Bank Alfalah’s Rs. 300/- or 3% of cash withdrawal
POS Machine: amount (whichever is higher)
Balance Inquiry
From Bank Alfalah’s ATM: NIL
From 1 Link member bank NIL
ATM:
From MNET ATM: Rs. 5/- per inquiry
From VISA member bank Rs. 25/- per inquiry
ATM:
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Corporate Banking
1. Murabaha Finance
 Types of Murabaha:
 Local purchases: For purchase of locally available goods
 Imported goods/commodities/assets
 Mode of repayment:
 Immediately in cash
 On a mutually agreed future date
 Spot Murabaha (Import)
 Deferred Sale Murabaha
2. Trade Finance
 Imports
 Letter of Credits
 Import Murabaha Finance
 Full range of services related to imports e.g. Contract registration, Import bills
for collection, Shipping Guarantees and Advance payments against imports.
 Exports
 Export Murabaha Finance
 SBP Islamic Export Finance Scheme
 Other export related services e.g. Collection of export bills, Negotiation under
Sight LCs, Advising/Confirmation/Transfer of Letter of Credits opened by
other banks
3. Bank Guarantees
A host of Guarantee types are offered by BAL-IBD including performance, financial and
payment guarantees. BAL-IBD also issues guarantees securing financing facilities to be
availed from Islamic Banks and/or Conventional Banks’ under Islamic modes of financing.
38
SWOT Analysis
SWOT Analysis is the combination of
 Strengths
 Weaknesses
 Opportunities
 Threats.
Actually it is an analysis which gives the overall picture of an organization status and at the same
time tells about the opportunities and threats by which an organization can improve its condition.
Such an analysis is very important for the management in retaining the strengths, overcoming the
weaknesses, capitalizing over the emerging market opportunities and craving ways to
successfully tackle with the threats and ultimately converting them in the strengths for the
organization.
Bank Alfalah Limited is one of the most flourishing commercial banks at present in Pakistan.
The organization is in the process of building itself into a force to consider. The bank is doing all
sorts of new things in order to accumulate a set of distinctive competencies that could later on be
transformed into a competitive advantage of considerable value. In this process of developing,
striving, facing minor set backs and striving with even more zeal, the bank enjoys some
strengths, needs to improve upon some weaknesses, can exploit some opportunities and is
hampered by few threats.
This SWOT analysis of Bank Alfalah Limited takes into consideration the external as well as
the internal environmental structure of the bank.
STRENGTH
Bank Alfalah is considered to be a very successful bank in the financial circles. A bank is
place where the customers can safely keep their money as long as they want. Some of the
major strengths of the bank:
39
Goodwill and trust
Lowest markup
On-Line banking
Comprehensive and diversified product portfolio
Bad debt rate is low
Excellent credit rating
Phenomenal Growth
Highly Professional and trained employees
Crucial Location Of Branches
Bank is financially strong and has a huge deposit reserve
Bank Alfalah has a wide network of branches at the ideal locations, catering the
financial needs of its clients.
Foreign Trade is the focus of bank. It has become an ideal bank for the importers and
exporters.
WEAKNESSES
Bank Alfalah also has some weaknesses. But their number is much less than the strengths of
the bank. Following factors need attention of the management.
Lack of advertisement through electronic media
Lack of innovative marketing.
Less Efficient Computer And I.T. System
Skill Set of Employees is not upto mark as there is no job rotation.
Foreign Banks still are a little more prestigious
Bank Alfalah Limited does not possess foreign network
Most of the employees are overloaded with work. There is uneven distribution of
work and promotions are not very timely
It is slow in the introduction of new services
Few branches has ATM facility
Employees feel over burdened
It has only one oversea branch although it does a lot of foreign trade business.
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OPPORTUNITIES
Bank Alfalah has grown up its business with a very high pace and it has got tremendous
popularity, even with in a very short span of time. There are many opportunities for the bank
and by availing that it can stand amongst the top foreign banks.
Extension of International network.
Capitalizing on IT
Introduction of innovative products.
Adopt E-banking
Growth in deposits
Growth in textile sector
Tide down of money
Expansion in branch network
THREATS
Political Instability
Increase in Competition with other banks
Revolving policies of state bank of Pakistan
Terrorist image of the country
Uncertain economic condition
Slow product development process
Change in govt. policies.
Internal audit system is not encouraging.
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RECOMMENDATIONS
I spent eight weeks of my internship in BAL Shadman Branch, Lahore. During these
weeks, I felt myself to be a part of BAL. Even, this was my first experience of working
in a banking organization. Before this I know a little about the banks, its working
system and environment, so I learned a lot from this experience. Based on my
experience & observation regarding the operations and policies of Bank Alfalah, there
are some recommendations which include short term as well as long term issues for the
improvement.
There is no efficient method introduced by BAL for his assessment of performance of
employees. Promotions are completely relying on higher management like managers
est.’s there can be some sort of favoritism. So to avoid all this, there should be a
proper method to judge the employees.
Bank Alfalah Limited needs to use more marketing channels to make the public aware
of its products and services. In the age of competition Bank Alfalah Limited has to
realize the importance of marketing.
Bank Alfalah Limited should continue to expand its business, by increasing its deposit
portfolio through aggressive market penetration strategies.
Bank Alfalah Limited should immediately improve its Information Technology
System. The soft wares currently in use should be made error free, online banking
should be launched as soon as possible, as it is the need of the hour, in my branch of
Shadman Branch all system got online during my first week of internship but till now
there are a lot of branches where working is not on online basis.
There is no rotation of employees within departments and cross departments. So the
top management should immediately start thinking in terms of rotating the employees
in various departments, as this transforms work force into human capital.
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Management should distribute work equally among different employees. Some of the
employees are overburdened while some sections are overstaffed.
Bank Alfalah Limited needs to improve its website. More information relating to
financial performance of the bank should be available on the website.
Bank Alfalah Limited should evolve a very serious management policy to attract multi
national corporations as its clients. This action, if actualized, would not only prove to
be highly profit generating, but it would also contribute a lot towards Bank Alfalah’s
image building.
The number of women hired by Bank Alfalah Limited is very less. Bank Alfalah Limited
should employ more women. Moreover it should also recruit women for working in
“Credits”.
One of the most pressing needs of the time is to advertise Bank Alfalah Limited in the
electronic media. BAL has not, till date, employed advertisement in electronic media
as a full fledge marketing tool. I think it is high time that BAL does this.
Bank Alfalah Limited should evolve a very serious management policy to attract
multinational corporations as its clients. This action, if actualized, would not only
prove to be highly profit generating, but it would also contribute a lot towards BAL’s
image building.
Presently, like most of the commercial banks working in Pakistan, a high percentage
of Bank Alfalah’s credit client hail from two or three industrial sectors. In the near
future the management of Bank Alfalah Limited should try its level best to diversify
as regards the mix of its advances; reason being over reliability on one sector of the
economy could hurt the financial soundness of the bank if any adverse change in the
external environment takes place.
One major draw back of BAL is the bank has stopped the consumer banking. Now
they are doing financing lease only. The bank should start consumer banking again.
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They are not doing operating lease due to the depreciation value but its not a good
step.
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